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Paid search producing positive results for hoteliers | By David M. Brudney, ISHC

Paid search such as Google AdWords and pay-per-click (PPC) is generally a tactical outlet for driving short-term bookings – – a direct response advertising tool that allows hoteliers to achieve strong potential revenue. Paid search links search guests to hotel website booking engines.

Paid search including AdWords is special, too, because of the value represented as a branding outlet, a public relations channel and its ability to lower distribution costs versus third parties.

“We have experienced a 20% increase in PPC year over year,” said Agnelo Fernandes, VP sales marketing, Terranea Resort, Rancho Palos Verdes, California (terranea.com).

“Since implementing an aggressive search marketing strategy, overall website revenue is up 50% year over year,” said Steven V. Seghers, president of Hyperdisk Marketing in Irvine, California (hyperdisk.com), referring to one of his hotel clients in the San Francisco Bay Area. “Return on investment (R.O.I.) for paid search alone is 6-1 and 8-1, and when you add in the total spend generated from paid search it is up to 15-1.”

AdWords and PPC advertising may be used in myriad ways:

  1. Special promotions to fill “need” or “opportunity” dates or periods, where empty rooms are projected.
  2. “Fire sale” or “flash sale” campaigns.
  3. As a “shield” for special discounts or value-adds from other packages and price points running concurrently on online travel agencies (OTAs); these special discounts and/or value-adds are available only to those visitors who have clicked on to that particular key word or phrase; thus allowing the hotel to retain rate integrity.

Paid search strengths:

  1. target need periods to grow occupancy;
  2. speed of measurement and flexibility to craft multiple messages to reach different markets (e.g., transient, group, social/weddings and deal buyers); and
  3. ability to tightly control budget.

How it works

Terranea’s Fernandes explained how it all works.

“Terranea devotes countless hours to search for key words and phrases that best describe Terranea’s attributes. We put ourselves in our guests’ shoes – – how the guest perceives the Terranea experience, how can we optimize that experience? What are those words and phrases that best “define” those guest experiences?”

Terranea also learns from reading guest surveys. “They tell us how the guest found us,” Fernandes adds.

The information coming out of that research is then analyzed, processed and converted into “key words” and “key phrases” most likely to match what Internet visitors are seeking when searching online for types of hotels and hotel destinations.

A sample of key words or phrases searchers might use: “luxury golf resort”, “Hawaiian resort destination”, “Rocky Mountain resort” experiences or “close to an RD business park” and “affordable airport location.”

Then the process of purchasing those key words or phrases begins. Based upon demand – – some of those words/phrases are highly coveted by hotel competitors – – prices can range from US$1 to US$2 per word up to as much as just under US$5, according to Terranea’s Fernandes.

A consumer, using Google for instance, might type in a word or phrase that may have already been purchased by a number of hotels. The search results will include an ad with a link to the particular hotel’s website and booking engine. Typically, the hotel that has “outbid” its competitors for that particular word or phrase will appear first.

Hotels are using a variety of full service sales and hotel Internet marketing agencies and online marketing consultants (e.g., Cendyn, Sabre and Hyperdisk) to help manage, monitor and optimize their e-commerce strategies and campaigns.

Paid search produces higher room rates and at less cost than OTAs

Hotel marketers interviewed disagree with the perception that paid search produces lower room rates. On the contrary, in many cases hotels are achieving higher average daily rates through key word buy campaigns.

Hyperdisk’s Seghers has created “unique landing pages” for one or more of his hotel clients. “These pages help drive up conversion rates . . . and there is evidence to support once visitors land on those unique pages they are ‘up selling’ themselves.”

“The cost to capture per hotel room booking through OTAs can range as high as 25% to 35% while paid search capture is 8% to 15%,” Seghers added.

Luxury resorts, in particular, are finding paid search to be of tremendous value.

PGA National Resort Spa, Palm Beach Gardens, Florida uses paid search campaigns to help drive hotel rate and sell more golf packages, according to Seghers.

“A big part of our e-commerce strategy is paid search. It works,” Fernandes said.

David Burke, VP of sales marketing for The Breakers, Palm Beach, Florida (thebreakers.com) concurs with Fernandes. “You have to use both . . . PPC and AdWords. (However) we still use the New York Times and a few other newspapers in winter to drive leisure business to our web site or call center.”

Burke shared the story of a golfer from Cincinnati who via paid search found his way to the Breakers’ website booking engine. “Historically, Cincinnati would not be a market where we would be spending any advertising dollars to reach golfers looking for a luxury resort golf experience. Online helps us reach those ‘hard to find’ areas home to potential customers for us.”

“Today we spend about 30% to 35% of our advertising budget on search engine optimization (SEO), paid search, PPC and display advertising. A few years ago we were spending only 15% to 20%,” Burke said.

Fernandes predicts within two to three years Terranea’s e-marketing will grow to 50% of its total sales marketing advertising budget.

Looking beyond the initial ROI metrics

AdWords and PPC are not getting the full credit they deserve, Seghers said.

“Too many hoteliers focus too much on paid search ROI for reservations booked exclusively online – – actual booking transactions on the property website’s booking engine. They fail to credit all of the ‘website lookers’ and ‘website buyers’ who wind up calling the hotel.”

Some visitors to a hotel website’s booking engine, Seghers pointed out, wait until later to book the actual reservations – – often preferring to call the hotel direct or the hotel’s call center.

“We’ve created and integrated a distinct tracking system for our client PGA National Resort Spa that records how many guests – – those who originally found the hotel website’s booking engine via paid search – – made reservations by calling direct. One-third of all bookings (with origins from paid search) come from phone calls,” adds Seghers.

Paid search checklist

  • Here’s a paid search “real” value checklist:
  • Total web bookings
  • Web growth statistics (visitors, traffic counts, geographical origins)
  • Call volume and inbound sales
  • Organic search SEO
  • Bookings made via call center or hotel direct
  • Initiating dialogue (creating fewer opportunities for “public” critical reviews)
  • E-mail capturing
  • Brand strengthening, building and growth versus comp set
  • Public relations channel
  • Growing loyalty with new guests (retain the customer for life!)
  • Lead generation
  • Referrals (from partners alliances, chambers of commerce, convention visitor bureaus/DMOs and hotel management company inventories)

Seghers advises his clients to keep a balance between paid search and other electronic and print advertising and public relations.

I will be writing more about paid search, SEO, AdWords, PPC and banner ads in my September column. In particular, I will be addressing any “downsides” that I’m able to uncover.

David M. Brudney, ISHC, is a veteran hospitality sales and marketing professional concluding his fourth decade of service to the hospitality industry. Brudney advises lodging owners, lenders, asset managers and operators on hotel sales and marketing “best practices” and conducts reviews of hospitality (as well as other industry) sales and marketing operations throughout the U.S. and overseas. The principal of David Brudney Associates of Carlsbad, CA, a sales and marketing consulting firm specializing in the hospitality industry since 1979, Brudney is a frequent lecturer, instructor and speaker. He is a charter member of International Society of Hospitality Consultants. Previously, Brudney held hospitality sales and marketing positions with Hyatt, Westin and Marriott.

The International Society of Hospitality Consultants, ISHC, is a professional society of 200 members in 22 countries who are leading consultants in the hospitality industry. The Society is dedicated to promoting the highest quality of professional consulting standards and practices for the hospitality industry. Membership is by invitation only. ISHC as an organization represents a one of a kind collection of experience and expertise in the hospitality industry. ISHC members have expertise in over 30 different specialty areas in the hospitality industry and collectively have experience with over 50 hotel companies and nearly 100 brands worldwide. Additionally, ISHC members represent numerous prominent independent hotels throughout the world. ISHC members’ clients include domestic and international, public and private hotel owners and investors, many leading financial institutions, Fortune 500 companies, food and beverage service firms, airlines, cruise lines, time share and vacation ownership companies, universities, state, national and international convention, hospitality travel and tourism bureaus. www.ishc.com.

Paid search producing results for hoteliers

Paid search advertising is becoming more commonplace with hotel marketers as a cost-effective, high-yielding e-marketing tool to help drive consumers to their respective website booking engines.

Paid search, such as Google AdWords and pay-per-click (PPC), is generally a tactical outlet for driving short-term bookings—a direct-response advertising tool that allows hoteliers to achieve strong potential revenue. Paid search links search guests to hotel website booking engines.

Paid search including AdWords is special, too, because of the value represented as a branding outlet, a public relations channel and its ability to lower distribution costs versus third parties.

“We have experienced a 20% increase in PPC year over year,” said Agnelo Fernandes, VP sales marketing, Terranea Resort, Rancho Palos Verdes, California. 

“Since implementing an aggressive search marketing strategy, overall website revenue is up 50% year over year,” said Steven V. Seghers, president of Hyperdisk Marketing in Irvine, California, referring to one of his hotel clients in the San Francisco Bay Area.  “(Return on investment) for paid search alone is 6-1 and 8-1, and when you add in the total spend generated from paid search it is up to 15-1.”

AdWords and PPC advertising may be used in myriad ways:

1. Special promotions to fill “need” or “opportunity” dates or periods, where empty rooms are projected.
2. “Fire sale” or “flash sale” campaigns.
3. As a “shield” for special discounts or value-adds from other packages and price points running concurrently on online travel agencies; these special discounts and/or value-adds are available only to those visitors who have clicked on to that particular key word or phrase, thus allowing the hotel to retain rate integrity.

Paid search strengths:

1. target need periods to grow occupancy;
2. speed of measurement and flexibility to craft multiple messages to reach different markets (e.g. transient, group, social/weddings and deal buyers); and
3. ability to tightly control budget.

How it works
Terranea’s Fernandes explained how it all works.

“Terranea devotes countless hours to search for keywords and phrases that best describe Terranea’s attributes. We put ourselves in our guests’ shoes—how the guest perceives the Terranea experience, how can we optimize that experience?  What are those words and phrases that best define those guest experiences?”

Terranea also learns from reading guest surveys. “They tell us how the guest found us,” Fernandes adds.

The information coming out of that research is then analyzed, processed and converted into the keywords and key phrases most likely to match what Internet visitors are seeking when searching online for types of hotels and hotel destinations.

A sample of keywords or phrases searchers might use: “luxury golf resort,” “Hawaiian resort destination,“ “Rocky Mountain resort” experiences, “close to an RD business park” and “affordable airport location.”

Then the process of purchasing those keywords or phrases begins. Based on demand—some of those words/phrases are searched more often and thus are highly coveted by hotel competitors—prices can range from US$1 to US$2 per word up to as much as just under US$5, according to Terranea’s Fernandes.

A consumer, using Google for instance, might type in a word or phrase that might have already been purchased by a number of hotels. The search results will include an ad with a link to the particular hotel’s website and booking engine. Typically, the hotel that has “outbid” its competitors for that particular word or phrase will appear first.

Hotels are using a variety of full-service sales and hotel Internet marketing agencies and online marketing consultants (e.g., Cendyn, Sabre and Hyperdisk) to help manage, monitor and optimize their e-commerce strategies and campaigns.

Paid search produces higher room rates and at less cost than OTAs
Hotel marketers interviewed disagree with the perception that paid search produces lower room rates. On the contrary, in many cases hotels are achieving higher average daily rates through keyword buy campaigns.

Hyperdisk’s Seghers has created “unique landing pages” for one or more of his hotel clients. “These pages help drive up conversion rates … and there is evidence to support once visitors land on those unique pages they are ‘upselling’ themselves.” 

“The cost to capture per hotel room booking through OTAs can range as high as 25% to 35% while paid search capture is 8% to 15%,” Seghers added.

Luxury resorts, in particular, are finding paid search to be of tremendous value.

PGA National Resort Spa in Palm Beach Gardens, Florida, uses paid search campaigns to help drive hotel rate and sell more golf packages, according to Seghers.

“A big part of our e-commerce strategy is paid search. It works,” Fernandes said.

David Burke, VP of sales marketing for The Breakers in Palm Beach, Florida, concurred with Fernandes. “You have to use both … PPC and AdWords.  (However) we still use The New York Times and a few other newspapers in winter to drive leisure business to our website or call center.”

Burke shared the story of a golfer from Cincinnati who via paid search found his way to the Breakers’ website booking engine. “Historically, Cincinnati would not be a market where we would be spending any advertising dollars to reach golfers looking for a luxury resort golf experience. Online helps us reach those ‘hard-to-find’ areas home to potential customers for us.

“Today we spend about 30% to 35% of our advertising budget on search engine optimization, paid search, PPC and display advertising. A few years ago we were spending only 15% to 20%,” Burke said. 

Fernandes predicts within two to three years Terranea’s e-marketing will grow to 50% of its total sales marketing advertising budget.

Looking beyond the initial ROI metrics
AdWords and PPC are not getting the full credit they deserve, Seghers said.

“Too many hoteliers focus too much on paid search ROI for reservations booked exclusively online—actual booking transactions on the property website’s booking engine. They fail to credit all of the ‘website lookers’ and ‘website buyers’ who wind up calling the hotel.”

Some visitors to a hotel website’s booking engine, Seghers pointed out, wait until later to book the actual reservations, often preferring to call the hotel directly or the hotel’s call center.

“We’ve created and integrated a distinct tracking system for our client PGA National Resort Spa that records how many guests—those who originally found the hotel website’s booking engine via paid search—made reservations by calling direct. One-third of all bookings (with origins from paid search) come from phone calls,” adds Seghers.

Paid search checklist
Here’s a paid search “real” value checklist:

  • Total web bookings
  • Web growth statistics (visitors, traffic counts, geographical origins)
  • Call volume and inbound sales
  • Organic search SEO
  • Bookings made via call center or hotel direct
  • Initiating dialogue (creating fewer opportunities for “public” critical reviews)
  • E-mail capturing
  • Brand strengthening, building and growth versus comp set
  • Public relations channel
  • Growing loyalty with new guests (retain the customer for life!)
  • Lead generation
  • Referrals (from partners alliances, chambers of commerce, convention visitor bureaus/destination marketing organizations and hotel management company inventories)

Seghers advises his clients to keep a balance between paid search and other electronic and print advertising and public relations.

I will be writing more about paid search, SEO, AdWords, PPC and banner ads in my September column. In particular, I will be addressing any “downsides” that I’m able to uncover.

David M. Brudney (David@DavidBrudney.com, 760-476-0830) is a charter member of the International Society of Hospitality Consultants and a veteran sales-and-marketing professional concluding his fourth decade of service to the hospitality industry. Brudney advises lodging owners, lenders, asset managers and operators about hotel sales and marketing best practices and conducts reviews of sales-and-marketing operations throughout the world. His website is www.davidbrudney.com.

The opinions expressed in this column do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, Smith Travel Research and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

Phoenix New Media CFO: Lite-Blogs Will Become a Dominant Social Media Product

iChinaStock

(iChinaStock News) At the end of 2006, ifeng.com was officially transformed from a company website to a portal website. Relying on Phoenix TV’s brand name, content advantages and cash conversion channel from China Mobile, Phoenix New Media has managed to establish a cross-platform business framework featuring “ifeng.com + Phoenix Video + Phoenix Wireless.”

Phoenix New Media was listed on NYSE in May 2011 (NYSE: FENG), another milestone for the company. How will Phoenix adjust the composition of its services and products? How will it enhance its ability to generate profits?

iChinaStock secured an exclusive interview with Phoenix New Media CFO Qianli Liu.

(Phoenix New Media CFO Qianli Liu)

The following is a summary of the interview:

Historically, 60% of traffic on Phoenix Video comes from Phoenix TV

Recent growth in traffic mainly comes from resources of non-Phoenix TV. It is estimated that traffic from Phoenix TV programs will drop to 30% in next year.

Number of subscribers of wireless video each month is between 250 thousand to 300 thousand. Number of times of played each month is as high as 2 million to 3 million.

Profit of video value-added business has realized a consistent 15% growth in the past few quarters

Revenue from video-related advertising business accounts for about 15% of total revenue from advertising.

It is expected that advertising business with Phoenix TV will reach 10%.

Growth of mobile value-added business will be slower in the second half of the year.

Profit margin of traditional WVAS is very low. Overall, Phoenix Wireless gets 60% of the business.

WVAS business will account for less percentage in the future. It contributes less than 5% of net profit margin and will not affect overall profit if it is removed.

In the future, quick blog, weibo and blog will be connected. But the focus will be quick blog.

Full Interview:

1. Pheonix New Media’s User Base

iChinaStock: What are the numbers of unique visitors to iFeng.com (NYSE: FENG), Phoenix Video and Mobile iFeng?

Ms. Liu: According iFeng’s internal data, daily unique visitors for the whole sitewere about 20 million in July. Monthly visitors reached 200 million.

In terms of the monthly number of users covered by the video business, it is expected to break 100 million in the third or fourth quarter.

By the end of June, page views of Mobile iFeng reached 130 million.

2. About Phoenix Video

iChinaStock: How have things proceeded since the initiation of the ‘Fengming Plan’?

Ms. Liu: The Phoenix Video Department was established in the fourth quarter of last year. We invited Zhihua Chen to lead the team. In the recent six months, our video business has been developing very fast. The KPI plan, which was enacted at the beginning of the year, was basically completed in May. Traffic growth is very fast.

iChinaStock: Is the growth in traffic attributable to the contents of Phoenix TV or others?

Ms. Liu: Many people have a misunderstanding and ask such questions. Growth in traffic comes from our original programs, cooperation with third parties, and non-Phoenix TV resources such as Paike.

Historically, 60% of traffic to Phoenix Video comes from Phoenix TV. In terms of browsing time length, Phoenix TV programs are shorter than other programs. Actually, there are a limited number of videos on Phoenix TV every day, just programs on the Chinese language channel and the information channel. They are not enough to satisfy the needs of a huge user base for a comprehensive video website.

First of all, we will invest more on original videos in the future. In May, we issued the Fengming plan, in an attempt to increase the number of videos. Of course, our focus now is on information-type short videos. In the second half of this year, we will try to expand our video content in entertainment. In the area of TV dramas, we cooperate with Letv and Ku6. Since the end of last year, we have added many original programs and Paike.

Therefore, the growth in traffic indicates our all-around growth. In the next two years, when we develop the TV drama business, programs on Phoenix TV will account for a smaller and smaller percentage. So, growth in traffic is all around. We estimated that by the end of this year, traffic from Phoenix TV will account for half of the total traffic and continue to drop in the future, probably to 30% next year. If we continue our efforts on original programs and expand the business of TV dramas, percentage of programs on Phoenix TV will be lower and lower.

Phoenix Video Considers Entering the Market for Online TV

iChinaStock: Does that mean that Phoenix Video won’t exclude entering the market for TV shows?

Ms. Liu: That’s right. We will not recklessly enter the market of TV dramas or scramble for exclusivity. But we will keep buying in the distribution market and probably enhance our efforts in the future.

iChinaStock: When entering the field of comprehensive video, will the website be mainly buying TV dramas or cooperate with Ku6?

Ms. Liu: If we really want to do it, we will buy them. But this is not to say that we will burn a large amount of cash next year, because we believe that we have big advantages in information-type programs and they have big potential for development. We also hope to let the sales team of our video department grow and see which area in the field of TV dramas we want to enter.

iChinaStock: How many people are there on the original program team for Phoenix Video?

Ms. Liu: Currently, the whole team, including editors, has about 100 people.

Phoenix Mobile Video Reaches 250,000-300,000 Monthly Subscribers

iChinaStock: Does video prepayment come mainly from PC terminal requests or mobile phones?

Ms. Liu: The majority is mobile video. Previously, PC terminal requests were not our original focus, but we got a significant number of PC terminal subscribers each month, about 50,000-60,000 excluding the number of program requests. So we gradually focused on PC terminal requests. Now we are testing a VIP client end product that can offer a higher-quality viewing experience.

iChinaStock: What were the numbers of purchasers of pay-per-view and subscription mobile phone video services, respectively? What were the growth rates?

Ms. Liu: Each month, the number of subscribers to our mobile videos is between 250,000-300,000. The number of per-per-view requests is related to the occurrence of big events. It can be as high as 2-3 million and as low as 1 million.

iChinaStock: For Youku (NYSE: YOKU), traffic from playing videos on an external website is about 20% of the total. Has Phoenix Video considered expanding ways to place videos on external websites?

Ms. Liu: Since the IPO, besides direct traffic and search engines, navigation sites, SNS and other community websites are among our major sources of traffic. We have conducted an in-depth and effective cooperation with big community platforms like Baidu and 360.

Video Value-added Services Growing at 15% per Quarter

iChinaStock: During the conference call on the night of the IPO, it was announced that the paid video business was already profitable. In the first quarter, revenue from video value-added services was $1.4 million. Was the first quarter profitable? What was the net profit?

Ms. Liu: Video value-added services have achieved a consistent 15% growth over the past few quarters. As one of the providers of China Mobile video content, we anticipate seeing constant growth of the business in the future. Phoenix Video features unique quality and popular contents, which guarantee the business’s lasting growth.

Video-related advertising accounts for 15% of the total

iChinaStock: What is the percentage of revenue from video-related advertising relative to total revenue from advertising?

Ms. Liu: About 15%.

iChinaStock: Besides the video resources Phoenix TV has, iFeng.com also compiles programs like news, conversations and documentaries. How would you evaluate their advertising investment and promotional effect relative to TV dramas? (At present, most viewers watch TV dramas.)

Ms. Liu: We think the business is very promising, because short videos have a higher commercial exposure rate. Commercials can only be added at the playing webpage, the beginning and the end of a 40-minute long TV drama and most people are used to watching it in full screen. Our ideal situation is to add a commercial after every 3 to 5 videos, with each one no longer than 60 seconds. At present, our embedded commercials are all shorter than 30 seconds.

3. Pheonix Media’s Advertising Business

iChinaStock: In the first quarter, the number of advertisers and advertising revenue have grown significantly. Will the second quarter see the same thing? Will the second quarter grow even faster than the first quarter?

Ms. Liu: Yes. We can see that from our expectation. We expected that the growth rate in the second quarter would be 140% over the same period last year. Actually our advertising sales team was established in 2010 and advertising revenue in the next few years will definitely grow at a high speed.

iChinaStock: How long will this fast-growth period last?

Ms. Liu: I think it won’t be a problem to keep growing that fast for 2 to 3 years. Of course, it is unrealistic to a keep triple digit growth rate for three years. But I believe we will beat the market for more than 3 years.

Our CPM is about half of that of Sina (NASDAQ: SINA), but our traffic is adding up very rapidly. According to data from iUsertracker, by the end of February this year, our monthly average unique visitors has grown 89%, second only to Taobao’s 117% and way higher than Youku’s 47% and Sina’s 33%. This growth rate is very attractive to advertisers.

iChinaStock: During the conference call, it was estimated that e-commerce advertising would contribute 14% of advertising revenue in the second quarter. What was the percentage of e-commerce advertising revenue in the first quarter?

Ms. Liu: This included investment in e-commerce-related services. The first quarter was 14%. Rapid growth of the e-commerce advertising has something to do with the rapid growth of the e-commerce industry.

Cross-selling Advertising

iChinaStock: Do advertising sales for Phoenix New Media and Phoenix TV have a competitive relation?

Ms. Liu: Commercials are mostly sold exclusively by Phoenix New Media.

Approximately 2% of commercials are from cooperative sales efforts. Clients of Phoenix TV have the need for joint sales with Phoenix New Media. But we have not pushed this much yet. Ideally this will reach 10% in the future.

4. About the mobile value-added business

The mobile value-added business to slow in the second half

iChinaStock: In the first quarter, revenue from wireless value-added service was 63.4 million yuan (about $9.6 million), higher than last year’s 35.8 million yuan. Will the business grow significantly in the future?

Ms. Liu: It won’t keep growing this fast. In the second half of the year, it will be growing more slowly than it did at the beginning of the year.

The business can be affected by multiple external factors. Our cooperative partner is China Mobile. The company covers about 90% of the business and is thus heavily related to the company’s internal policies. Also, China Mobile is undergoing a big internal transformation and the overall growth rate of the industry will be affected.

iChinaStock: Does Phoenix have corresponding measures for each carrier’s policy change to ensure growth?

Ms. Liu: This is difficult. Actually, traditional WVAS services do not have obvious advantages and they are basically homogeneous. Our strategy is to spend more on efforts in 2.5G and 3G, because they may not be greatly affected by a carrier’s policy change.

Low profit margins in WVAS

iChinaStock: What types of services does WVAS (wireless value-added services) provide?

Ms. Liu: All Internet companies have their own wireless value-added business. Ours is smaller in scale than that of Sina and Tencent. Our WVAS service is mainly text messages, including ring tones and MMS. Our services are preinstalled on a large number of third-party mobile phone manufacturers and, in the meantime, we have our own marketing channel.

iChinaStock: How is the profit shared between the carrier and channel cooperators of the mobile value-added business?

Ms. Liu: The carrier gets a fixed percentage. For example, for text messages, Phoenix gets 85% and carrier gets 15%. But the 85% we get has to be shared with our third-party channels, which includes the previously mentioned mobile phone manufacturers. Overall, we lost a big percentage to third parties and get about 60%. This is why traditional WVAS has such a low profit margin. It basically relies on volume and fixed marketing channels to support the business.

iChinaStock: No matter whether warrant expenses are considered, gross profit margin in the first quarter was lower than last year. Was it because of a higher profit-sharing percentage?

Ms. Liu: The profit-sharing percentage in the first quarter was higher for two reasons: First, in the first quarter, text messages accounted for a higher percentage in paid services and they are the business that has a higher profit-sharing percentage. Second, we added new channels in the first and second quarters. Even though the percentages remained the same, with extra marketing channels, the overall profit-sharing percentage went up.

WVAS is not a top priority

iChinaStock: Does it mean that this WVAS business is not a top priority?

Ms. Liu: Yes.

There are two points I want to stress: First, Although WVAS business accounts for a big portion of revenues now, the percentage will be lower in the future. Second, WVAS contributes a very low net profit margin, less than 5%. So it doesn’t affect our overall net profit to a large extent.

The reason we are still doing this is that most of our paid customers are China Mobile users. They use 2G, 2.5G and 3G services. We need to provide full-suite services to them. So we will do whatever we can in the business. But it is not our focus.

iChinaStock: With fast development of mobile network and professional mobile phones, surfing the Internet through a mobile phone is very convenient. Will this trend bring negative effect to the needs of WVAS business? Similarly, it is very convenient for people to log on to news client-end like ifeng.com and there will be less and less need for reading papers on mobile phones. How will Phoenix maintain sustained growth of mobile value-added services?

Ms. Liu: On one hand, with popularity of smart phones, it is very easy for users to download applications. We are also developing applications for mobile. But we think that there is less need for news-type client end than need for applications and games on the client end. On the other hand, with emergence of HTML5, mobile phones will become powerful web browsers. The future trend is to obtain information on the Internet directly. We have advantages in this area. Mobile phone iFeng ranks third among comprehensive portal sites, after Tencent and Sina.

5. Social Media and Other

iChinaStock: On mobile, aside from traditional revenue sources like the service provider business and mobile phone newspapers, are there any other innovative developments?

Ms. Liu: Of course. Lite-blogs, new mobile phone applications, and digital reading are now led by Executive Vice President Yulin Wang. We will increase our effort in innovative developments. We think that from the perspective of mobile, the revenue source in the future will definitely be advertising.

Although there are now many paid services, there will be fewer people who are willing to pay. The paid business will still keep its growth rate of 10+%, but the main revenue source is advertising.

iChinaStock: Can you state the position of Phoenix’s Quick Blog?

Ms. Liu: We think the market lacks a Facebook-like product that satisfies the high-end user population. Weibo (Sina’s Twitter-like microblogging services) is very successful, but it is essentially a Twitter-like product, or we can say it’s an instant messenger tool. At present, Q-zone should be the product that is closest to Facebook in China. But the product is obviously positioned for the young people. Quick Blog is positioned for the high-end population and focuses on high quality content and, in the long run, strong social relations.

iChinaStock: As for Sina Weibo’s contents, do you expected it to develop into a comprehensive platform or develop vertically?

Ms. Liu: It’s too early to talk about this.

The number of users covered by iFeng.com each month is 200 million. So we have a very solid user base. Even though Quick Blog has the same user base as iFeng.com, their contents are not related with each other. We hope that Quick Blog will focus more on personal interests and not face the big regulatory risks that Weibo does.

iChinaStock: How is it different from Diandian and other similar [lite-blog] products?

Ms. Liu: Quick Blog does have similarities to other products. They all adopt a social model similar to the American website Tumblr.

But compared with others, we have obvious advantages in funding, brand name and user base. But it depends on each one’s ability to target and serve the high-end population well. We need to study our users’ habits and work out a high-quality content-driven Facebook-type product.

iChinastock: Is there a detailed implementation plan and thoughts on the business model?

Ms. Liu: Yes. We may consider Quick Blog contents’ compatibility with iFeng.com. In the future, there will be an operation team, which will introduce good, iFeng.com-related topics to the light blogs. Compared with Weibo, lite-blogs are led by topics so that people with similar interests can find them and add a social layer.

Actually, Sina Weibo is much like media, because there are many idea leaders, from whom people can obtain breaking news. But it cannot fully satisfy the needs for detailed contents or sharing among each other.

As for the business model, there is no detailed plan.

Quick Blog will be the core of Phoenix’s social strategy

iChinaStock: So Phoenix Weibo has basically been shelved?

Ms. Liu: We will connect our Quick Blog with weibo and blogs in the future. But our focus will be on the Quick Blog. Quick blog will become our main social media product.

There are only three people that work on Phoenix Weibo. But with number of users increasing, the number of posts is now very high. So we can see that users of iFeng.com have such needs.

iChinaStock: Does CEO Shuang Liu’s comment on weibo (“Weibo is shit.”) represent Phoenix New Media’s strategic attitude toward weibo?

Ms. Liu: Mr. Liu was definitely not negative about weibo. His point was that in terms of content, weibo has a lot of superfluous, or even fake things, whereas a quick blog has a higher quality of content.

Phoenix New Media Builds on Phoenix TV’s brand

iChinaStock: Some may think that Phoenix New Media relies too heavily on Phoenix TV for its contents and China Mobile for its payment channel. Of course, the two biggest shareholders can be regarded as where Phoenix’s advantages are. What is your opinion of this? What is Phoenix’s unique difference from other portal websites?

Ms. Liu: Compared portal websites, Phoenix started in 2006, relatively late. It is really impressive to be where we are now in as short as five years.

First of all, we have advantages in our brand name. Of course it, to a great extent, comes from Phoenix TV’s advantages in brand name. But we make good use of it. In addition, we position ourselves very directly for high-end users. With brand name advantages and accurate user positioning, we are able to work well on products like the Quick Blog.

iChinaStock: When inheriting high-quality programs from Phoenix TV, does Phoenix New Media have any alternative plans to expand its news anchor team, guests and idea leaders?

Ms. Liu: Yes, especially in original programs for Phoenix New Media in the future. In the video program Public Relativity, the anchor invited Phoenix TV news anchor Zimo Zeng and learned from some successful models and experience of Phoenix TV’s talk shows. This is a good example of taking advantage of Phoenix TV’s resources.

(By Gisele Li, iChinaStock.com)

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Improve ROI on your PPC advertising campaigns

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It is well known that pay per click marketing campaigns can be expensive and time-consuming. The ultimate reward of a fantastic ROI (return on investment), however, makes it all worth it.

Writing for American Express Open Forum, Stacey Politi has created a list; featuring ten steps that can be taken to improve pay per click marketing campaigns and, more importantly, ROI.

Here are just a few of the tips provided by Politi:

  • Coax people in with an offer they can’t refuse – The PPC market is inundated with competition, therefore you need to make your ad different. Politi states: “Are you running a promotion? Is shipping free? Offer value and then capitalize on it with a call-to-action.” By including terms like ‘learn more’, searchers are more likely to act on the advert.
  • It needs testing – You can’t just expect to start up a PPC campaign and expect the best results, it just doesn’t work like that. Intricate testing and in-depth analysis are necessary. Testing a number of adverts at the same time is also important, however remember to run just one variable per time and ensure that the testing phase is long enough to gather good data – this will only help in the long run.
  • Be aware of your Google quality score – Google Quality Score is the overall determiner of your AdWords account ranking, and this is vastly important as it helps to determine where on the search page your ad will feature. If you stick to the rules set by Google AdWords on a consistent basis, your score is more likely to be higher. A sudden drop in the score should set the alarm bells ringing and shouldn’t be ignored.

News brought to you by ClickThrough – experts in SEO, Pay Per Click Services, Multilingual Search Marketing and Website Conversion Enhancement services.

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